Pharmacies Can Sue Drug Firms|On Price-Fixing Antitrust Claims

SAN FRANCISCO (CN) – Bay Area pharmacies can sue Pfizer and a slew of other pharmaceutical companies for conspiring to fix prices for brand-name prescription drugs, the California Supreme Court ruled. Unanimously overturning a Court of Appeals summary judgment, the court held that the drug manufacturers could not use the “pass-on” defense: that the pharmacies did not suffer injury under the Cartwright Act because they could “pass on” the overcharges to customers.

“To allow defendants universally to assert a pass-on defense … would hamper enforcement by reducing incentives to sue and police antitrust violations,” Associate Justice Kathryn Mickle Werdegar wrote for the court.“Allowing a pass-on defense would plunge parties and courts into minitrials attempting to trace every penny of an initial overcharge.”The court also rejected the manufacturers’ argument that the pharmacies could not sue without proof of financial loss. “That a party may ultimately be unable to prove a right to damages (or, here, restitution) does not demonstrate that it lacks standing to argue for its entitlement to them,” Werdegar wrote.Among the drug giants named in the case were Novartis, Bristol-Meyers Squibb, AstraZeneca, Amgen, Johnson & Johnson, Wyeth and GlaxoSmithKline.“We’re obviously elated with the decision,” said attorney Joseph Alioto Jr., whose office argued the case. “Judge Werdegar used the same language that you used to see used by the United States Supreme Court. We hope this marks a new era of heavy enforcement of antitrust laws.”